Cantel Medical (CMD) 4 Jun 202020 Q3 Earnings call transcript

Good morning, ladies and gentlemen, and welcome to your Cantel Medical Third Quarter 2020 Earnings Call. All lines have been placed on a listen-only mode and the floor will be open for questions following the presentation. At this time, it is my pleasure to turn the floor over to Matt Micowski. Please go ahead.

Thank you. everyone. morning, good And Executive we Financial President Diker, Accounting Peter and and Vice Vice Controller Seth Vice call, Officer; Corporate Chief Board; Blakeman, President, and Shaun Clifford, of Brian George Officer. President Senior Yellin, Officer; Operating Fotiades, Chief and Chief Chief President have today's and Chairman Growth Chief Chuck President the Executive Vice Officer; On and Executive Senior Officer; Capone, results press this third for the financial issued announcing Earlier XXXX. the a of release year morning, fiscal quarter the company

In to website addition, references, presentation, reconciliations supplemental Relations we can have posted Presentations. the non-GAAP in complement along a presentation under of Cantel's This today's section call. on Investor be found with

call and Exchange forward-looking projected. involve statements filings may forward-looking predictions statements Before the including detailed the uncertainties, those All Securities contain and Commission. differ materially remind we begin, I conference like statements. risks would limitation, reports from with company's to and in may Such the without and actual risks results only this everyone are that

to Additional in introduce presentation The press Reconciliations contained George in Fotiades, release. release. and these measures. earnings be non-GAAP I'm to our will measures earnings most directly to to pleased financial forward-looking you the GAAP measurements information financial are also call CEO. and references company statements making of supplemental financial comparable today's on concerning today's is provided With President that,

good morning, And Matt. everyone. you, Thank

our best also brought This I express worldwide. our has of on this out performance, lines want join our the voices Cantel. to providers I appreciation crisis the my customers COVID-XX deepest in discussing Before healthcare gratitude chorus to pandemic. absolute to forum this wish all in employees to the of and expressing front

Minneapolis Long have been our New and essential Rochester, Island and Hauppaugue, masks over associates in chemistry to million Pomezia, in there and Italy produce York Our weekly facilities. X make to

outside more XXX heightened received requiring systems manufactured of nearly orders serve due the critical has of units clinic, portable needs new dialysis been for units. which approximately XXX mobile These water a have patients, dialysis and COVID. portable We to more particularly

had requests. my We quickly to customer three who of adapted takeaways There serve safely field to this procedures are facilities enter personnel morning. and from also new comments hundreds service

very also the expenditures Cantel our in markets important agile First, since the capabilities. pandemic, and core been we as managing What's to have proactive we of maintaining beginning has is resources our while flex our remained daily. monitor

into Second, to and balance future. significant we liquidity, the steps our strengthen sheet ample us overall taken security have giving

leader to of business very infection and with important, procedures. the uniquely our a in is prevention, positioned recovery as Third, quickly rebound elective expected

through and COVID-XX quarter prevention the state US procedures of our by focus today, shut XX will third than reporting environment, Medical and ADA, weeks our local relevant in March CDC, impacted in is future. down last why in five be elective locations response are In the infection to this performance. Starting we in Our we XX, remain required pre-COVID confident guidelines. and most highly more customers that which April Dental

previous revenues total $XXX down quarter, the second million third impacted For of were sequentially our versus non-COVID XX% quarter.

PPE. prior XX% excluding performance. total relevant sales understand the in or were Dental Looking these the not revenues equipment in approximately last versus personal that quarter, off year-over-year at are our of comparison while specifically are third versus business Medical and off sequential roughly for five was Dental segments the weeks Medical pre-COVID XX% useful the XX% Note second the the comparisons non-COVID or of same protective especially to as and down quarter,

Dental, Medical, the the audited open was – up the revenue May procedures – was elective and rate parts in XX% estimated improvement seen XX%. In versus country. revenue rate May off have in are off be We as estimated to of in in to May pre-COVID beginning rate;

are difficult includes COVID of know, forecast April, procedures influenced is deferred though encouraged in affected hard-to-predict comfort during it impact of which, improvement period. relative of this level pace to as the to pace added patient needed early we these restoration is the also signs factors of rescheduling to May including facilities. by We elective procedures reenter The by

we actions in communication variable a As May, aggressive manage we implemented discussed earlier have in to expenses.

redeploy work bring while made engaging furloughs evaluating to smarter in with in and response All broad that back employee reduce managing our us costs enables use to us of as structure our make more workforce. we operations. retaining have We done changes and this demand. to to recent we reductions Cantel resources will efficient more compensation and the normal resources This cost experienced have quickly

with As until October of amendment many of profitability we the significant to and for we an credit flexibility XX, minimum this XX, secured to with necessary leverage overall replacing on suspension metrics provides have XX and the environment our liquidity flexibility It reported May us navigate earlier such XXXX. for them next the provides facility. months. amendment a This ratios as covenants,

also debt. scenarios. ample recent exceed to our cushion comfortably cash ensures million issuance new liquidity This well as to been operate fortified under credit conservative $XXX with as and an position the has covenants, requirements of Our recovery in our convertible

back we recovery, challenging to it reasons Three that looking predict can are So, believe positioned our as with is while certainty the I this. to markets of come fast why uniquely pace recover. I say ahead,

assistance new dental markets, primary reopen in endoscopy customers go-to in and information we resource are efficient our and facilities a a in safe, compliant for and end in this helping environment. First, manner

doing we months, topic have engaged two COVID dental which programs the workplace, last the webinars and approximately and XX,XXX, professionals. medical the in have and of training on been example, For

clinical several personnel who to COVID-related service preparing are We and with also hundred closely customers, employ protocols. working with field new operate

to idle and As functional several being systems after their ensure and products weeks. they practices need reopen, calibrated for are

go as in COVID strategy our important the protection for impacted complete the this even we Second, forward of be will world. workflow more of circle reprocessing

help already gradual safety, practice, them solutions. to productivity to turnover are personnel safer new protocols room We of dental how unique with deploy workflow to improvement PPE a finally, GI use the to patient for and and intake working understand with our from procedure to and of room

we X.X first make growth to on earnings we last Cantel initiatives, call. which at discussed Finally, continue our progress our

will in The us months. term push had While contend priorities, with will to as the we these ahead in pandemic-related meaningfully move of with progress great these that how near forward recovery. next actions has continue actions we X.X three benefit to the Cantel confidence few Cantel perform gives combination

So, review financial information. let the key to over Shaun to me the now turn discussion

with key going everyone. good brief commentary. George. morning, through Thanks, And results I'm our to go financial

additional impact, I'd provide context to to And like the references will will that, with details specific volume that sequential the second to the to COVID quarter XXXX. I April's with give impact more financial relevant given close I comparisons. following begin the year-over-year of However, decline. comparisons

the the by X.X% the Hu-Friedy, basis, stable Dialysis of grew Dental portable in for sales by increased are water resilient Q&A. segment declined QX, earnings during given which these the we negative then relatively basis. growth of but an of helped Overall, X.X%. saw PPE we quarter the believe George for X.X%. and deck Sciences XX.X% demand by higher for The on on an available during of any very basis. M&A XX.X%, segments was basis the year-over-year results X.X% you The our demand the and accounted offset systems, third of to previously, procedures. cover year essential the reported during with X.X% may can decline Overall, on dialysis. in standard course, reported prior and environment. driven unprecedented a XXXX an details Net grew organic to in Life nature have driven along, currency low mentioned start renal due in pandemic, XX.X% disinfectants a we follow being decline organic an is as basis, to a on financial difficult organic decline segment, that pandemic, constant offset acquisition are negative X.X% you and market been Life a sales partially FX organic Dialysis the better-than-expected in elective have organic and severe on the to Of which more additional questions and Sciences versus previously

segment deferrals. the Capital procedure an last and of basis, organic to negative weeks Dental, the by similarly decreased impacted period by Medical year. five the recurring on COVID-related decreased XX% significantly equipment the negative revenue in XX.X% prior the Finally, negative XX%, quarter were declining versus

recovery months. volume are improvements and continued we few next May mentioned, over anticipate George As the sales in rates seeing

to margins. Turning consolidated

Our GAAP gross XXXX, by year-over-year contracted to in XX.X% declined XXX the non-GAAP XX.X% margins third to versus basis gross points negative XX.X%. by basis of negative quarter XXX while points margins

nearly of normally initially short-term manufacturing inventory in slowdown that our valuation. we of accelerated costs result and our million a incurred be underutilization, an recognition subsequent the would in absorbed into As $X

lines, In also addition, more margin financial consumables, acutely impacted mix as our additional higher the deferrals procedure some color gross I'll discussion our are on end Again, margin reflects pressure. margins. our with which that generally

adjustment a $XX.X associated down Moving Hu-Friedy. to an of $XX driven op million. op decreased fair year-over-year non-GAAP with operating to by profit profit million, the increased basis, around mainly $XX to XX.X% GAAP XX.X% acquisition of favorable to earn-out profit, On value million negative year-over-year related

driven the our tax the Non-GAAP and by was of came primarily denominated the earn-out XX.X%. was of rate primarily rate was XX.X% in prior-year rates. This overall operations. a decrease tax the tax to of US XX.X%. Hu-Friedy's compared benefit by XX% effect tax rate non-GAAP quarter Moving international to The of offset at fair partially operating was effective related to earnings by of value negative the loss unfavorable of the rate net and a adjustment to impact liability. effective driven carryback GAAP an for prior-year This the benefit compared

GAAP As a $X.XX. to share increased XX% result, year-over-year earnings per

year-over-year Our non-GAAP decreased XX.X% negative cents. per to share $X.XX earnings

I'll Finally, adjusted sheet down balance flow to on in now and million, EBITDA $XX.X year-over-year. items. move XX.X% came negative cash at

pullback million from increase the at operations remained Our first the receivable inventory capital quarter, other our significant cash quarter, primarily all a XX% relatively quarter in which drawing equivalents The and cash improvement results. result the down in came and cash cash change spend. while from $XXX.X flat. driven as the in from from payable million expenditures accounts ended revolver. outstanding $XXX.X $XX.X by $X.X is We working in a second half sequentially of significant were with accounts quarter Capital non-essential million, offset of in this largely increased our million Working each and in capital. flow

debt while ended our gross to $XXX.X was million. at profile, $XXX.X million, Moving the debt quarter debt net

Overall, actions performance to our those into balanced, X.XX, Our pandemic. position light debt proceeds, in hope week is ending much our We term help net million short, to sitting includes May, with update adjusted pay months With in $X.X continue cost processes. costs by indicative also we conclude respond will EBITDA's Hu-Friedy at performance $XXX decline and reductions million, to ability amount possible as results. of our working in execute of million, execute approximately of relevance approximate we ratio is recover. a time, like net executing and billion its an I use aggressively balance given out keeping the but in to management and our what seven debt mind loan. as aspects our cash to our we remarks our and QX in down would In short approximately volumes. down that gross cash approach unaudited we provide in through sacrificing to pleased variable which balanced the of volume, provide reduced cutting our was debt to of immediately steepest as is convertible our of COVID and offering. carefully context of procedure $XX.X sitting key elective our debt we to first $XXX our strict without through approximately the at rigorous the would very my in a of I more through proactive capital in reacted like to are providing periods results ability had believe that volumes stronger proving transparency

costs, gross of margin to on variable decline volume In costs total, baseline, non-GAAP of a $XX variable XXX able as fixed. manufacturing reduced our basis with is second we by Regarding XX% reduce were approximately recognition XX%, decline. expense quarter rate, XX% the the our approximately We a costs means of XXXX our of million and variable I we gross excluding lower structure than second capitalized margin, control inventory. XXXX month in revenue the the quarter of normally April, for took if quickly which accelerated manufacturing treat in of was measures our April, approximately points cost to

through to to average regarding reduce to monthly how aggressively decline. able cash XX% I we pushed operating preserve the spend. to to the decline would were April flat, to working we on the pullback combination April Even cash compared capital, XXXX and cost Additionally, we second like and minimal quickly out manage of were be in payments, expenses, in capital with costs collections to we SG&A cash in cash. able the and and relatively sudden approximately reductions salary pleased strongly procedural discretionary quarter a net respect payments. by to with the of note specifically delayed from judiciously furloughs, And volumes, acted working with to very contributor maintained a hold inventory pressure that We're were able steep

burn cash million estimate that I I improve in around and normal approximately up could month. April, occur cash our be to And collection built we peak a expect cycle June that due $XX thereafter. to peak million our Although to $XX

to while that the course, this that we ample Of weather appreciate execute we patience to our remarks. back exactly listening of important next our will instability I'll reminder, will as we does feel over it these by as an supports have I turn And George it's not now that belief future gauge pandemic. to your months additional concluding April, liquidity details. for the imply week. be a XX-Q filing

Coming Cantel. a up will for busy be summer

of with and these continue all remain solutions. balance workplace of maintain discipline the top delivery we the efficient and continue will Number to to We sheet. vigorous one, extend to procedures safety disciplined our stewardship This will to be operating internal and reliable protocols services on focusing and expenses will priorities. our

assist and to will procedures our for customers markets how clinical and solutions daily Second, our in by restoring Medical protocols efficient and on the continue field safely to to recovery Dental sales, work with under teams new consulting with workflow. and restart service

will continue Cantel the we on to critical make initiatives. headway Third, X.X

centers, instrument For infection our focus surgery the organization expansion provide more on of expanding example, efforts our penetration management to in the solutions system. Hu-Friedy of account director Group prevention and key the

Cantel in the very are relevant in are by embedded X.X, We environment. energized post-COVID opportunities which a even more

performance be the We will we details our uncertain supporting are optimistic have about The of partners factor at the an recovery. in impact weeks. in engaged more our continue coming earnings September. share call said, to will on and to COVID in That deeply

We ready are for now questions.

take Raymond you. [Operator Thank question Instructions]. first go And we'll Please James. our from with Lawrence ahead. Keusch

focus where there's in more and those prevention? more in – everyone. on where you up the we where George, Dental of pandemic Great. really durable is expand of and out out of peaks the bit Can most morning, you. become control there is the aspects pandemic as Medical little going think focus you to getting Thank you of and we where and obviously positioned are across again. come Cantel the and head procedures that on use I'm on to can focused, Good a as spoke business start infection

Yeah.

because, – for how continue First, the things think deal I I been found good morning, the mention, used That, that prior the on short just Larry. with Thank question. workflow But new to pressure importance protocols getting to then, revenue obviously, several and on to disruption that compromise there what Seth obviously, beyond think will, for have can first and throughput to I to and how this. of comply could and is discussion in you training people contend we've helping get And put the protocols back that is are to term, they that. they going foremost, chime with think to these with. their may new I get what regulations margins. is we've and have throughput around Look, probably

on focus organize products are particular, throughput we places like of surgery what in think centers look disposable many do how number to whether Dental, a as while office of we throughput the think, that particularly in durable Medical in investment which provide that at for the reprocessing they some enhanced the the which in will workflow, the be requires kinds it to to of and can of office. things circle there the it's dental a things time, the are outset and the provides we surgery with respects both protection solutions, workflow center and greatly our I environment. expedite to So, also instrument system, management or become those similar offices our post-COVID can at it dental in the over

by benefit our go than instrument will to in second. we for infection talking pause post-COVID we be to can resonate it our of if please are the system areas the has which key we to account lead the importance And in and ahead. executives think more prevention, talking wanted I'll provide add past, support of hospital, offering. far to so, suite of complete the in we to can clinicians the aided provides that about management Seth, director going who clinical our the Look, talked that program that to much that, anything a that more our dental assessments attuned provide in meaningfully. know C all that a environment broader can a and fact you about adoption solution importance

comes that with solutions as equivalent prevention prior over the practice to look solutions, the with to as say, accelerated interest elements safety customers help both the and these in very all infection such IMS, captured up protocols seen better we've I'd and drive efficiency interest you nicely. people some better in periods with think I the of major XXX% their strong solutions. with engagements

our there's capabilities that up backdrop. needs the by are So, COVID good of further here with a match enhanced think our customers' we

all thank ask Okay, you I'll two other here. quick for that. ones just

I you First, procedures of Dental a the could talk – little then, provide how lastly, kind a enough Medical you're bit capital bit is bit guidance kind Medical. that would thinking Medical? shaking of May of you you But were about clarity to lag about how environment about think just between on Dental, some a versus not have a out. point. recognize speak equipment to And recovery around you're you the little and expect this on providing Maybe at

those take like the assume the of be If bit you'd remainder you appear seemed quarter, consensus. it Street fourth fiscal to sort the of a up rates and improvement of numbers kind come May through the quarter, no higher with than that

So, outlooks? do quarter little think have that on think people sort a Thanks about bit you to of much. very fourth their recalibrating

Okay, Larry.

we I I'll it There can if several questions. all captured think I are of right. see those. good very get

different coming people impact in the medical unfolding. in how There's and on country about the Likewise, done dental how they in Medical, of see there's of versus of different lot a see Obviously, question that the how of, will been Look, lot we might be that. let's things. see research impact Shaun unemployment cover can rate at all, say, know forward. Dental And the we part First the the current I'll points of insurance parts medical time. trying spent cover time going that how things impacted you unfold think have asked might on we the I that independent that's a take progress, last certainly question. by capital. of might Pete, offices to

behind lot month a know Dental Medical. of coming be would of that's don't guess or these the there recovery. versus probably not. could back slower contribute of a two end which behind factors I to on or like we the I think if may So, are say I months pace

as it urgent a be of done ultimately which verified need, the as need outside people reopens. generally could to bit to of a that that quickly or a may is deferred an center I let's a feel procedure on impact or a hospital a endoscopy, think has and less done get more colonoscopy been say, to susceptible we it's insurance. It because know needs get as surgery that that be some may the maybe versus

sure So, guess, this time. may our thing adjustments to obviously, can Dental just what that calibrate we and modeled take of is more on we've I month little bit be sort we monitor But accordingly. month make a model to

question go how to and see capital I'll answer let equipment Let's unfolding. we that. that Pete the

Dental Yeah. we capital side, Larry, as have you're very exposure. little aware, on the

think On relates see will it I O-US softness very the side, we to little as capital. Medical

X:XX:XX] Within the purchases US, softness the that. combat next couple for we of are [indiscernible some anticipating quarters on to

aware, diligently working you're As pretty been on ASC strategy. the we've

the One on a new ASC that of quarter, of third third that leasing things at to program. we strategy, the launch the beginning aligned was did bringing party

now that, hospital the I quarters. is So, relative very impactful think obviously, lean or relatable of to and to the as timing in the we next of strategy couple

novo central half in a slowdown May, but de speaking, summer. repairs the the have path we on would builds. return to We've COVID has been still of centrals was actually then, think as retros side, on very Sciences business, seen softness. of back a things. portables little impact, and the that I of the that in in on on busy, access we to we the of say, which moderated ahead, the clinicians tale it's two is existing combat a Life bit and with expect April So, schedule with capital we've a clinic And been moving Generally some our

you May the in reality we're to happen estimates the assume what little you that's for your do that you that QX terms is what yeah, to COVID a match outlook, exposed logical Shaun. would last with quarter. This going the the think to to is less to in up question that to of assessment those whole in it. summer kind that And to need I than I'd hi. being on logical, for most I entire entirety, think of QX But extrapolate seeing bring do if agree Obviously, bit with going Larry, I acutely QX reiterate regarding is and revenue. if that its QX were believe be we're so it's it's going

very guys. you Thank Great. much,

I'd last point, Larry. add on just Yeah. one

pretty for in dental feedback here in in here and September. we've PO that has The mood that's about that we I indicator be the uninterrupted activity think on season to points have May. think looks Dental really POs is side fairly one what all May, school we the been the in positive the positive the schools gotten, we August as and see very especially

Great, thank you very much.

And our question will from with Matthew next Mishan come KeyBanc.

Good practices. crisis. experiencing this guess, understand Great. a And value entrepreneurial your with the It's out help can dental are businesses. three the where guys, months I of understand medical? competitive I is hospital thank fully last customers morning. fragmented, for were you call. I'm been with that hearing since coming can what questions. proposition type in enhanced and customers that They But long better with disruptions more that are some me your you relationship you

two have disruptions, the but competitors he's one of talking of competitors, Competitive my you to on we where business. without as our a protection, so of name suite or not that competitors, again, complete on bowel we protection complete have talk Look, having about solutions, circle about let's comment of circle parts about just know. the

we're entire So, to endoscopy one process end Cantel. who the knows is in hospital, the case company from beginning the the to talking

to it's are the back come up recalibrate suite, service the the are service eight which with need to serve technicians people they for, suite, cases, as doing. in particularly ones in some GI weeks' that that idle time where and We GI clinicians who they laid with

service can the to from Also, that other most beginning to situation, you when cetera, really et end need you turning comes with obvious company to. really that close the that base, we're consider that chemistry, one there's that, only again, resource. go-to competitor to restoring AER installed our no deal provide which there's they're when So,

So, become of resource sort go-to that's fact, is the why really built-in for a I think that hospitals. reality we've

sort side up a stress just for of is access to as suites, having greatest lot install And limited, the startup the the space. on, our a and now at fact the right point, Medical restart on have where the their of think to unprecedented And less our this up synergies to the And is businesses. The they're tend practice access fact the ASC we'd where our huge. compliance opens I of I guidance anybody throughput our similarly in side behave ASCs think on access and plays door is dental wider complicated there's looking that customers suites important, in between actually our Matt, again, folks again, hospital competitors. procedures add have I'd and time a on somewhat that this of natural that and but that Dental Yeah, and is the on base compared probably business sophisticated. of are one that efficiency at

able I up better, again, with our back we're be than help the So, think not start people anybody positioned safely ASC clinicians actually on only to to side, but drive throughput.

Very interesting.

are some of management of up thinking like trying potential How about like does thinking for customers? they as practices dental again? that being system What disruption you're bringing in to XXX%. that look of the that? For Hu-Friedy, the investment the about practices and are Dental tightening How online instrument of talked some about the upfront engagement versus you startup that the

different IMS combines the I to associated the And dental example we full right, there's utilize implementation. is to with think of the it suite, to a of of type ways a with host implementation a be system the can great the the practices these configure comprehensive instrumentation, whole consumables. deliver that partial workflow products, can that candidly, solutions it process

a which maintain we've dental of around practices, seen drive problem the safer reprocessing a particularly to spike true interesting, in engagement clear is understanding a to new is what's efficiency. the I level think efficient interest instrumentation help of solutions in though, in drive environment is and what

remains of there constraints as would recovery and solutions. the remain, in and very our dental So, disruption, scrutiny say despite of here, interest that the that some market broad unknowns a George level but I around heightened pace highlighted, budgetary

the as So, I seen, but specifically the IMS interest be is think of translates seen of sales in and to versus operate light solution, that other we've immediate host we're tools encouraged suite, educational more our well compliance those we broad timeframe to efficiently including in longer solutions green safely. more types bring program and as and a timeframe practices accelerate how to training whole product different to that in the dental our enable

one. And a broader last question is

on capabilities As Dental the focused existing inspection looked mainly infection you bringing of companies with prevention, your look X:XX:XX] your sterilization prevention, customer you in around supporting Medical or helping are opportunities certain here and you online? do bases at around areas better at have [indiscernible economy in back

our obviously, an to as division, fogging decontamination had opportunities of come just on a lot think surface we've more the in Sciences dry disinfection around opportunities of Life bio sort equipment example, our I and chemistry as broadly very dental broader that well have products that been with think I example. an historically Obviously, our focused healthcare beyond the in dental business going into those obviously, pretty and, and PPE clear sector. surface it's

continue that in there's techniques. road news of the some a the think obviously, opportunity still There's down the future we be that as reprocess to sterilization do with. I an that in do in lot lot a obviously and to And future. think we think we will quite what then about well [indiscernible the struggling X:XX:XX] do an and that application of NXX folks trying masks to an could that example would with

Thank much. you very

comes from question Needham go next our And ahead. with & Please Matson Michael Company.

margins. Good Yeah. couple questions. just guess on to start with a morning. my I for Thanks want taking

revenue taken period? kind reduction effect So, permanent beyond these declines first, are here, be all an ongoing measures? cost address that going short-term and have of Or the any efforts the short-term with to to you've really are these this of all

terms really trying the especially this And is July like be a disciplines we'll I proceed to, like variable focus maintain basis executing we and viewpoint can think of cost how to by now by beyond is get for day been look it how going a it. something for that in would what to that And we move would week attack might the has now, side. sure in future, the going and look manufacturing summer, of the right at infrastructure is at on post want point. That's right, make – by environment May, these what to any to a we look start saying day, anticipate that and out. side I that place. on that other we and that come I of we're our the good kind right, But like keep discipline week June out foreseeable we play kind right think understand would calls to understand on on summer looks make forward the we before the to

it's benefits add that's new certainly spend Yeah, to is brought Look, a how everybody the daily. I we level one like kind I'd out of discretionary cadence new aware find expect There's below a pandemic Mike. and would think environment. the I T&E running that acutely will And production come the dollars. just is business on, strange this. of of of And areas as that I we COVID pre the supplies we think of

a basis So, daily again, here. running there's business strangely to been the on positives some

just it then, was in about sounds I And like down, points the on X helpful. timeframe. the April gross margin, guess, Okay, that's it

kind kind where looking we quarter, kind And so, assumption? of of but know Is I at that X points reasonable level, should be? a I that is you're not we guidance, of the should it's down year-over-year? that into guess, giving assume fourth

That quarter, non-COVID. comment of was XQ believe which actually previous kind of were largely we a stable a sequential like from kind

still they're the was that way [Multiple extent to think the the volumes to volume, would But excludes obviously, also is somewhere So, basis would between QX XXX to I in safe to XXXX X% – mitigation we I I Speakers] look to comment underutilization plant. have a extent expect, that. at to points of be its than to due that the entirety be there'll earlier, normally going would stronger some on exclude – expect less – it. XXX capitalize recognition look is point it if the the that asked expense accelerated that we at be probably similar. point at basis to does

So, is fairly like a the for looks that what trough look us. at clean

Okay.

our revenue about of XX% overhead of Mike, How that is you and is that, of might think is half about fixed.

just XX% it's fourth in down the we similar commentary Can there, then, being question XX% on I And the April, it quarter? assume for SG&A guess. about down so Okay.

I Yeah, Roughly, expect do roughly, I'd out the play same say play for to same quarter. it the way way. it will the out

Okay, great. Thanks.

with to Mitra next Ramgopal move we'll go And Instructions]. Sidoti. Please [Operator ahead.

Thanks Yes. Hi. morning. taking Good for questions. the

the to just Life on wanted follow-up business. First, Science

playing additional unprecedented of not the see a talked I for if about was temporary that maybe to you and you I a George, demand terms out just wondering, necessarily the think, capacity shift you longer you how have your if portable term, that [indiscernible dialysis. demand, in X:XX:XX]. this as investments see to relates as it make to – meet

Yeah.

able that to demand. meet been have We

to obviously able supply We three have flex And get big throughput improving challenge they've shifts while the Minneapolis assembly accelerating a to to work It's difference days has moving by well able an moving at a been which prior it seven accomplished. chain team accomplish. it point, scenario, demand largely been make this been the shifts, as more as week well. it's able from to to and to been in the by

So, we're demand. in meet completely confident the to ability the

Yeah. business. think, business same across is street you're manufacturing from the assembly Mitra, and the Sciences portables look, aware, And on the our Life and as or just campus of the Medical I centrals the

AER those temporarily about, we've the as lot our had people similar and So, business lines that on a talked moved faster. to actually set, react are lot to a we've AER have of lines, portable or softness those skilled the people from a obviously, of over we've skill

clear, none But number recall, I to are of Okay. if declines you've closures great. in elective a a end of that you result The the in in of the fair? your talked cetera. disruptions, ways just obviously, a reflection be terms more affected really seen And No, market, that's any really as of facilities is way cetera. companies pandemic. Is are about, then, just different of the as or et et affected procedures,

been had we've the in rule, day, in has levels run general US as the Italy At and demand. able capacity as relatively been facilities, we've the there's manufacturing disruption the some been the Plant Yeah. end unimpacted. to at but of required certain meet to pieces a into come

kind you of wondering, as it how more I'm Some do, X.X introductions that's we're the to of much Okay. but to just much were has And relates plan, back relates down? product of obviously, maybe you a in, to things planning slowed that else. initiative unveiled, or to it the coming the long-term environment anything maybe as

represents of dealing there Like look, to priorities pandemic. I short-term the the of mentioned move comments, say of they to to But Pete with lot And than that I on as benefits some others. these have my faster environment. move these all to of and certainly, lot some focus be on I say, progress script, and provide in I make post-COVID my continued a had some will terms COVID a a in an team of the faster certainly opportunity think, the initiatives, can in

So, to Pete, But, color? I give of bit said a come that. why little more you don't on

in a to as we Yeah, I of accelerate time April prepared and May folks to would launch our the in not sales quarter. our strategy fourth access to commercial lot ASC the training be and of some example during by Europe. just here excellence that say, an was traditional gave used us look, opportunity finish created It having

nice as of April not really strategies having Again, I faster move much sales that that redeployed freed slower, and to that. So, the of access execution. we continuing on job some the to really because bandwidth and was in a we time but of that with further guys think May did partly not move up

suspending thanks how reducing on focus buybacks number how or dividend, along for we think on then, not of But et lines initiatives, in obviously, anything focus that. in should stock the cetera, now. right et about that. acquisitions, the cash allocation those of capital you've assuming And conservation, about the implemented No, Okay. maybe a and you're furloughing, I'm forward? thinking cetera, terms a certainly debt terms going of

one over is foreseeable I'd the paying horizon the number say down focus without doubt debt.

on. just add I'd

we be refine I we incredibly hard last worked think processes side the well. test is six with to have to a last did Mitra, accelerate ourselves that to that at bit And the collections been thing, we where our not we is, to with the on in ways have lost over the progress capability the that over last and the and nine pandemic, critical did the SAP put wouldn't capital to months to was the we launch think I SAP in process that do to a pretty and delivered performance months business one the is to control teams our and in the working this team reality year improve with hadn't that a made reality if able disbursements six position de-expedite ways the saw we and time. really, bumpy the in the have

us get the to in been the SAP that but have not a way, prefer efforts I boost again, So, the on pandemic gave that really tested fruitful. really side

Very good point.

Okay. for questions. taking Thanks the again

turn session any call closing remarks back to have. our today. over may conclude for management does that the question-and-answer they for I'll And

Yeah.

couple a remarks in closing. of Just

our said you am will proud significant the in career. most the but one in the managing our just pandemic, tell at see I an challenging, customers. out of all, in best brought ability as I I absolute and has as that, what pandemic First certainly, do forward this we Cantel, the Cantel what outset, for past about again, move it extraordinary and can this quarter, how of I incredibly in a and not to challenging company my employees

our are being next for great you I call. we to why the future. and talking on Cantel call. that's So, optimistic particularly you, that, initiatives, a And thank With forward at earnings to everybody summer about look X.X about wish our

your participation. And teleconference. that does today's appreciate conclude We

and your lines at have You time day. a this disconnect wonderful may